In less than a week, UK shops and businesses will be able to open their doors to customers, getting the nation spending again and people back into employment. The UK stands on the cusp of much-needed economic stimulus – according to a report this month by the Organisation for Economic Cooperation and Development (OECD), Britain’s economy is likely to suffer the worst damage from the crisis of any country in the developed world.
In recognition of the critical role businesses will play in our recovery, the Government has established a number of business initiatives, such as the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan (BBL).
While these go a good way to helping certain SMEs, start-ups are not eligible. The UK’s Future Fund was established in May to support businesses - but only those who have raised at least £250,000 in equity investment from third-party investors in the last five years are eligible, suggesting a preference for the more mature SMEs who already have venture capital or significant angel investment. And most of those will be male founded companies.
The figures for fundraising regarding gender are stark – a report by the British Business Bank revealed that all-female founded enterprises received less than one per cent of investment from VCs, while all-male founded start-ups received 89 per cent - figures that prompted the Telegraph's Women Mean Business campaign to close the funding gap.
I’ve spent over 20 years advising a wide range of companies, both large and early stage, on financing options, and I can attest that SMEs led by women appear to have greater difficulty raising all rounds of finance, from seed upwards. This is despite many of them having a solid idea, business plan and growth strategy.
The business case for backing female-led companies is strong – private technology companies led by women, for example, are more capital-efficient, achieving 35 per cent higher ROI, and, when venture-backed, 12 per cent higher revenue than start-ups run by men, according to a report by the non-profit Kauffman Foundation.
A 2018 study by Boston Consulting Group in the US found that female-run start-ups generated more than twice as much revenue than male-run start-ups for every dollar invested. Results like this should be music to the ears of investors. When there’s proven potential, why wouldn’t you maximise the opportunity?
In my role as Advisory Board Chair of a fund which invests solely in female-founded enterprises - and where we have just launched a £10m fund - I observe first-hand the innovation of female founders. One company in the portfolio was created to reduce the impact of the shipping industry on the environment by driving down emissions; one is a cancer research firm which has developed an automatic calculation system for administering appropriate drug dosage during radiotherapy; another is an e-commerce platform of customisable solutions for retailers getting back on their feet following the Covid-19 lockdown.
The potential of these kinds of firms and their relevance in today’s world shouldn’t be understated - and neither should the women behind them. If we ignore their potential as we leave lockdown, we risk widening the economic gender gap and leaving women behind.
Societal preoccupation, before Covid-19 and even throughout it, has been focused on the environment, sustainability, health tech. Environmental, Social and Governance (ESG) and sustainability-led funds have outperformed traditional funds over one, three, five and ten years, according to data provider Morningstar, including during the pandemic – investor interest is aligned with companies who embody the ESG agenda, and is growing.
These kinds of companies will help lead the way through Covid-19 recovery, out of the worst recession the UK has seen in 300 years according to the Bank of England.
Today, we’re at the starting line of establishing an economic resurgence, bruised and battered by a virus that arrived swiftly and took many lives and livelihoods from us.
It’s a time of change, a time of acceleration. Attitudes have shifted and Governments and businesses have the opportunity to make brave and bold decisions that will shape this new world we find ourselves in. I urge the funding industry – VCs and Angel investors, male and female – to follow suit and be more open minded towards investment in female-founded businesses.
As the UK looks to get back on its feet, women need to be supported in realising their full economic potential so that a lockdown gender gap does not undermine the nation’s chance at recovery. It is in everyone’s interests that female entrepreneurs have a level playing field with their male peers.
Lesley Gregory is Chair of law firm Memery Crystal and Advisory Board Chair of the Innvotec Female Ventures Fund